Message from Zhongguķ Middle Kingdom

Itâs like Iâve died and gone to heaven, friends. I canâ t say what Iâm doing but will give a full report in about a year from now but it is something like this. http://www.charterx....le.aspx?id=4824

To do business in China harkens back to the days of Calvin Coolidge in the 20âs or Eisenhowerâs 50s where unhindered and unfettered growth and profit was tantamount. Love it.The government partners make sure that there are no roadblocks of any sort and things move forward at a breathtaking pace. China must grow at a minimum of 6% to absorb the work force and a fast growing middle class will ensure stability away from the outside worldâs woes. They plan intelligently for every contingency. The government has a grasp on reality.The Chinese people are truly wonderful and there is a zest and energy in the air that is contagious. They crave knowledge and the schools focus is innovation and creativity. Top students, especially math and science, get scholarships at the best universities in the world. They recruit the best brains from the west. I have seen just about every inch of China even the desert areas and we are way ahead of schedule in what we wish to accomplish. I am not blind to certain questionable elements of the society and Iâm always mindful of who's on my 6. I function best in uncertanty.

My son married his Shanghais native sweetheart in Arkansas last Saturday and my daughter is pregnant. Life is good. I hope to have two Chinese grandchildren this year.

I leave this evening to go back to China after 3 weeks in the USSA. My newly extended Chinese family and my 90 year old parents will accompany me. I am repulsed by American liberals and it will be a relief to get back to freedom. My hierarchy of needs are God, survival/vocation, family then country. As an aviator, I always leave myself an out.

I still have interests in the US and the anti-business mood in the states is positively sickening. It is colder in southern Florida than Shanghais also. Hows that global warming thing working out for you?

I had forgotten how much I hate white liberals who have all but destroyed western civilization. Your days are numbered, Iâm afraid. If conservatives donât change the course of progressivism in the USA after the mid elections, you all better kiss your asses goodbye. The west is all but done if they donât.

Lech Walesa tells America this month, âThe United States no longer leads the world politically or morally and America is slipping toward Socialism. The world has no leadership.â

Shanghais is one amazing city. Car factories, airliner factories, fighter plane factories, theaters, restaurants, and high speed trains. Plenty car nuts. The Chinese are inspired by America and are distrustful of the English and the Japs because of certain unpleasant events in history. The capital flight to China from the west should be a wake up call. We each have a house built 3 in a row to unbelievable standards. We have never worked so hard in all our lives and Iâm away from home a lot. My son is almost fluent in Mandarin and Shanghaislese and we each have a mentor/or valet/ chauffer. My son married his. We donât have cars yet and are driven around in locally built black Buicks.

Good to see your still alive Mate, have a bei jiu on me or better still get your ass over to Chengdu and I'll buy you one myself and some proper Sichuan huo guo (hot pot) or better still we'll stew up some Pandas :-)

My son married his Shanghais native sweetheart in Arkansas last Saturday and my daughter is pregnant. Life is good. I hope to have two Chinese grandchildren this year.

Initially I read it to mean your son had married your daughter. I am glad I continued reading, I found out that your son married his servant. Quite the "capitalist" move by that Chinese girl, I can understand why you must be so proud.

To do business in China harkens back to the days of Calvin Coolidge in the 20’s or Eisenhower’s 50s where unhindered and unfettered growth and profit was tantamount. Love it.

Why these periods? Cultural conflicts regarding immigration, race, alcohol, xenophobia, gender politics, evolution, and sexual morality all flared up. I do understand you didn't say socially, you said "to do business". Compared to incorporating in America at those times, incorporating and doing business in China is harder today. There's so much regional disparity, bureaucratic red tape, and guanxi to overcome. If you want an example, look at Apple's business in mainland China. Their iPhone was forced to be limited (by having no wifi) in China and you can't buy any of their products direct on their online store (see http://www.apple.com...co=MTAwMTI3NzU). You seem to be in manufacturing though. How's it different?

The government partners make sure that there are no roadblocks of any sort and things move forward at a breathtaking pace.

The CCP is the only political party with power in the country and it's officials are known for past corruption. "Power tends to corrupt, and absolute power corrupts absolutely" comes to mind. Look at the melamine scandal, housing construction industry, or the Three Gorges dam megaproject. Not to mention the censoring of media by the General Administration of Press and Publication.

Top students, especially math and science, get scholarships at the best universities in the world. They recruit the best brains from the west.

Yes, but I'd like to add that these brains are more often than not Chinese. It is hard for someone who doesn't have citizenship so China isn't necessarily getting the best "in the world" but it's diaspora. Furthermore, even today the "海归" phenomenon and the respect they'd get from returning has diminished. Check out this article: Sea Turtles: Wall Street Chinese Returnee Says America Easier

I have seen just about every inch of China even the desert areas and we are way ahead of schedule in what we wish to accomplish. I am not blind to certain questionable elements of the society and I’m always mindful of who's on my 6.

The law is awesome, guanxi is awesome, regional disparity is awesome (see guanxi) and I have never been able to do business so easily, so fast and with so much help from private and Government sectors (guanxi again).

But because a few arrogant outsiders come here and say "we'll do it my way" get taken and their asses kicked all the way back home that's China's fault? Yeah right.

Keep up your 1960's propaganda crap Mate, some of us actually live and do business here.

Chinese Business Culture

Guanxi, An Important Chinese Business Element

âGuanxiâ literally means "relationships", stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. The Chinese businessmen mentality is very much one of "You scratch my back, Iâll scratch yours." In essence, this boils down to exchanging favors, which are expected to be done regularly and voluntarily. Therefore, it is an important concept to understand if one is to function effectively in Chinese society.

The importance of "Guanxi"

Regardless of business experiences in ones home country, in China it is the right "Guanxi" that makes all the difference in ensuring that business will be successful. By getting the right "Guanxi", the organization minimizes the risks, frustrations, and disappointments when doing business in China. Often it is acquiring the right "Guanxi" with the relevant authorities that will determine the competitive standing of an organization in the long run in China. And moreover, the inevitable risks, barriers, and set-ups youâll encounter in China will be minimized when you have the right âGuanxiâ network working for you. That is why the correct "Guanxi" is so vital to any successful business strategy in China.

Although developing and nurturing the "Guanxi" in China is very demanding on time and resources, the time and money necessary to establish a strong network is well worth the investment. What your business could get in return from the favors for your partners are often more much more valuable, especially in the long run, and when youâre in need. Even domestic businesses in China establish wide networks with their suppliers, retailers, banks, and local government officials. It is very common for individuals of an organization to visit the residence of their acquaintances from other organizations, bringing gifts (such as wine, cigarettes, etc.). While this practice may seem intrusive, as you spend more time learning the Chinese culture, it will become easier to understand and take part in this practice that is so central to successful Chinese commercial activity. To start, pay close attention to your immediate Chinese network, and try to establish good "Guanxi" with them. They can indirectly link you to new acquaintances and information resources, thus helping you to develop other right "Guanxi" you need.

How business is conducted

The Chinese culture is distinguished from the Western culture in many ways, including how business is conducted. For example, the Chinese prefer to deal with people they know and trust. On the surface, this does not seem to be much different from doing business in the Western world. But in reality, the heavy reliance on relationship means that western companies have to make themselves known to the Chinese before any business can take place. Furthermore, this relationship is not simply between companies but also between individuals at a personal level. The relationship is not just before sales take place but it is an ongoing process. The company has to maintain the relationship if it wants to do more business with the Chinese.

How relationship is established

First of all, it does not have to be based on money. Treating someone with decency while others treat him/her unfairly could result in a good relationship. Second, it starts with and builds on the trustworthiness of the individual or the company. If a company promised certain things and delivered as promised, the company is showing trustworthiness and the Chinese would be more inclined to deal with them again. Third, being dependable and reliable definitely strengthens the relationship. It is like being friends, and friends can count on each other in good and tough times. A good example is related to the 1989 political instability in China. Companies that stayed found their relationship with the Chinese strengthened as they were viewed by the Chinese as friends who did not abandon the Chinese when they needed friends. Fourth, frequent contacts with each other foster understanding and emotional bonds and the Chinese often feel obligated to do business with their friends first."Guanxi" or relationship with high rank officials are still important for doing business in China, though declining to some extent. Political and administrative interference in business have declined. More and more companies have found themselves on their own surviving without government subsidiaries. If they are not getting any help from the government they are more reluctant to be influenced by government officials. So government "Guanxi" may have less influence with these companies.

Since "Guanxi" and relationship could function as an information network, companies with wide "Guanxi" and relationship networks often have much higher performance than companies with little or no relationship with the Chinese.

Final Words on "Guanxi"

Keep in mind that "Guanxi" can take on many forms. It does not have to be based on money. It is completely legal in their culture and not regarded as bribery in any way. So, there is no need to feel uncomfortable about it. Trustworthiness of both the company and individual is an important component. Following through on promises is a good indication of this. Treating someone with courtesy while others treat him or her unfairly is another aspect. Frequent contact fosters friendship as well. Chinese feel obligated to do business with their friends first. There are risks with this system, as well. When something goes wrong, the relationships are challenged, and friendships quickly disappear. "Guanxi" can also be very one-sided. When "Guanxi" is involved, there is a risk of obtaining an invoice of twice the amount that you bargained for.

The problem is I could link all day but it's like a Uni Professor who knows everything but has never actually applied it in the real world.

It takes a few years here to start to understand/skim the surface of it, very interesting to see it in action sometimes.

One of the worlds biggest hypermarket chains has tried for 2 years to get into this city, last week someone asked my Lady and she made one phone call and they are in. She will be reimbursed for the phone call,;), and the guy at the other end will probably have to visit the hypermarket head office in Europe and inspect some of it's store in some other countries as well and you know at who's expense.

It's no different in many countries just that it's almost all of the time here not just some of the time - when is the next Oz Government 60 people strong contingent going to Europe for some 'environmental discovery' trip for example. I guess one good difference here is that it's private companies paying for these expenses where as in Oz it's the people.

When Brammo was setting up Ariel Atom he tried and tried to get Ecotech engines without success and then Jay Leno rang up to order one and Brammo told him about the Ecotech problem, Leno made one phone call and suddenly Brammo had GM asking how many and when.

âGuanxiâ literally means "relationships", stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. The Chinese businessmen mentality is very much one of "You scratch my back, Iâll scratch yours." In essence, this boils down to exchanging favors, which are expected to be done regularly and voluntarily. Therefore, it is an important concept to understand if one is to function effectively in Chinese society.

Totally, thats how they got all their insider info but those 4 guys were outright thieves as well and very greedy ones at that, lucky the 3 Chinese Chinese weren't executed for treason. I think the charges have been reduced to 'commercial secrets trading' probably a deal with the Oz Gov?

They were juggling both sides by the way, Rio is stock driven so they aren't about to tell their stockholders that 4 guys were manipulating share and ore prices - raging a word war on China was a good smoke screen.

cheapracer, thanks for sharing your insight. I'm also curious what specifically I referred to that caused you to say "Keep up your 1960's propaganda crap Mate"? I doublechecked all the sources in the articles I referenced and they all are from 2007-2009.

The law is awesome, guanxi is awesome, regional disparity is awesome (see guanxi) and I have never been able to do business so easily, so fast and with so much help from private and Government sectors (guanxi again).

You must be very successful at guanxi then. If you could, could you give examples of how the above are so awesome? I read what you posted about guanxi. If you were successful at it and had someone scratch your back then I could see your calling it awesome, but as a system overall I couldn't see so.

I think guanxi is so pervasive in China since for such a long time there was little law at all. I'd like to quote Business Law in China: "Even prior to 1949, China had not developed a stable national legal system along the modern models of Western Europe, North America and Japan. By the end of the Cultural Revolution in 1976, the practice of law and its teaching in universities had practically ceased. Since 1978, Chinaâs leaders have launched a historic process of restructuring the national economy and gradual opening of the borders to flows of goods, technology, services, capital, people and ideas." While it is in the process of slow reform, in the absence of contracts and enforcement people HAD to rely on personal relationships if they ever wanted to get things done. In contrast, in the West I like to think and hope that the most capable person should get the job/contract/deal/etc, not because of cronyism or nepotism. I'd also like to point out from the same http://chinese-school.netfirms.com you quoted, about guanxi: "In a highly centralised, bureaucratic state, the use of personal contacts was the only way to get things done. Guanxi is the counterpart of a commercial legal system. Where the latter is relatively weak, as in China, the need to rely on guanxi will be strong. As long as the relationship is more valuable than the transaction, it is logical to honour it. " Also I'd like to hear your thoughts on why China is ranked 140/179 on the curent Index of Economic Freedom World Rankings?

As for corruption, "According to Transparency International, China ranks 72nd in terms of perceptions by risk agencies and country analysts of its vulnerability to corruption. It is common for employees to be involved in purchasing and sales corruption, kick-backs, thefts of confidential information as well as treating on behalf of their employers with enterprises in which they have interests. Nepotism and favoritism have resulted in transfers to insiders of State-owned assets at abnormally low prices, grants of credit and other advantages without due regard for counterparty risks, the awarding of concessions and contracts without due preference for the most competitive offers, appointments and designations without due regard for individual abilities."

Most of all though, how is regional disparity awesome? The world and it's international organizations have been trying to erase trade barriers and make conducting business as much frictionless as possible for decades. What works in one part of China and does not work in the others is a major drawback, wouldn't you say?

I don't mean to attack you cheapracer, I just want to learn more. I've studied in Singapore, Hong Kong, and Macau and been to mainland several times myself and have a command of the language. Living there presently, you do probably have a further insight than I and I welcome it.

I'm guessing PII discovered that a close and amicable relationship with the Chinese Communist Party was a prerequisite for the successful conduct of business in the PRC and has as a result gone from staunch anti-communist ideologue to Comrade PII, friend and faithful supporter of the CCP. Even the most rabid capitalists will convert at the sight of ready money.

I'm guessing PII discovered that a close and amicable relationship with the Chinese Communist Party was a prerequisite for the successful conduct of business in the PRC and has as a result gone from staunch anti-communist ideologue to Comrade PII, friend and faithful supporter of the CCP. Even the most rabid capitalists will convert at the sight of ready money.

In P2's world of pure commerce, ideologies represent an unnecessary cost.

In P2's world of pure commerce, ideologies represent an unnecessary cost.

Which would be fine except when they passionately espouse one ideology in quasi-religious terms and once remaining faithful to that becomes personally inconvenient they remorselessly become apostates. Why not just remain categorically non-ideological and avoid the bald hypocrisy?

Which would be fine except when they passionately espouse one ideology in quasi-religious terms and once remaining faithful to that becomes personally inconvenient they remorselessly become apostates. Why not just remain categorically non-ideological and avoid the bald hypocrisy?

Stunning lack of self-awareness would be my guess.

Also, when you are fighting a noble crusade and vanquishing a great enemy, as opposed to simply making a buck, you don't need scruples.

I found his comments as an ex-military person an 'interesting' comparison against ground troops who were also in Vietnam. If I had to grossly simplify, I'd say pilots are very gungho about blowing shit up and people in the jungle think it all sucks.